Daily Morning Report

Tuesday, December 11–Jim Wyckoff’s Morning Markets Report

OVERNIGHT DEVELOPMENTS

World stock markets were mostly higher overnight. U.S. stock indexes are pointed toward higher openings when the New York day session begins, following a big rebound Monday afternoon from steep losses seen in the morning.

The world marketplace was encouraged that a high-level telephone call took place Monday between trade officials of the U.S. and Chinese government. The two sides have until March 1 to reach a trade deal, or the U.S. has threatened to levy more trade penalties against China.

Brexit turmoil and uncertainty regarding when and how the U.K. will depart the European Union still have European stock and financial markets a bit unsettled. Prime minister Theresa May Monday called off Tuesday’s vote on her Brexit plan, which most reckoned would be voted down anyway. The Euro currency and British pound sunk on the news, and the U.S. dollar index rallied.

Gold prices hit a nearly five-month high overnight, partly on safe-haven demand from Europeans over the Brexit uncertainty, and also on more bullish charts supporting technically based buying interest.

In other overnight news, Indian stock and financial markets gyrated after India’s central bank chief abruptly quit. The Indian rupee dropped sharply on the news.

The key outside markets today find the U.S. dollar index lower on a corrective pullback from solid gains posted Monday. Meantime, Nymex crude oil prices are modestly up after selling pressure seen Monday. There are still no early technical clues the crude oil market is close to a bottom.

U.S. economic data due for release Tuesday includes the weekly Goldman Sachs and Johnson Redbook retail sales reports, and the producer price index.

–Jim

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Monday, December 10–Jim Wyckoff’s Morning Markets Report

OVERNIGHT DEVELOPMENTS

World stock markets were mostly lower overnight. U.S. stock indexes are pointed toward slightly weaker openings when the New York day session begins. Shaky U.S.-China trade talk prospects and new documents released late last week more strongly suggesting very high-level Trump presidential campaign staffers colluded with Russia have traders and investors uneasy to start the trading week.

Meantime, Brexit turmoil and uncertainty regarding when and how the U.K. will depart the European Union have European stock and financial markets unsettled. The U.K. Parliament on Tuesday will vote on an exit plan proposed by Prime Minister May, which is expected to be rejected.

In overnight news, the latest official Chinese trade data showed the world’s second-largest economy continuing to slow down in its rate of growth, as total exports were up a much-lower-than-expected 5.4% in November, year-on-year—and at an eight-month low. Imports also missed expectations significantly and were up only 3.0% in the same period, versus up 21.4% in October.

The key outside markets today find the U.S. dollar index firmer. Meantime, Nymex crude oil prices are lower and trading around $51.86.

U.S. economic data due for release Monday is light and includes the employment trends index.

–Jim

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The U.S. Treasury bond futures market this week saw prices hit a three-month high, amid a double-barrel does of bullish fundamental news: flight-to-quality buying as U.S.-China tensions may be escalating, and buying interest on notions of a more dovish U.S. Federal Reserve. The bond and note market bulls are in firm technical control, to suggest sideways to higher price action for at least the near term. Keep reading my daily market reports for those early chart clues on potential near-term price trend changes in the markets you are following. Stay tuned!

Friday, December 7–Jim Wyckoff’s Morning Markets Report

OVERNIGHT DEVELOPMENTS

World stock markets were mixed but stable overnight. U.S. stock indexes are pointed toward weaker openings when the New York day session begins.

There is still some anxiety in the world marketplace Friday, following the news Thursday that Chinese tech giant Huawei’s chief financial officer was arrested in Canada, on behalf of the U.S., and the U.S wants to extradite her. China has called on Canada to release her, ahead of her scheduled hearing on extradition to the U.S. today. This matter has sparked fears U.S.-China trade tensions could rise further despite the recent agreed-upon truce.

Traders and investors are awaiting what is arguably the most important U.S. economic report of the month: the Labor Department Employment Situation Report for November, released this morning. The key non-farm jobs number in the report is forecast at up 198,000. Given the recent talk of a slowing U.S. economy and maybe a less hawkish Federal Reserve heading into 2019, today’s jobs report will be even more closely scrutinized by the marketplace.

In overnight news, the Euro zone economy grew at a paltry rate of 1.6% in the third quarter, year-on-year, which was slightly less than forecast.

The key outside markets today find the U.S. dollar index near steady. Meantime, Nymex crude oil prices are also near steady following another drop Thursday. The OPEC oil cartel is meeting in Vienna, Austria again today. Reports said OPEC heavyweight Saudi Arabia has not agreed to a production cut and is now skeptical an agreement can be reached. This has many crude oil market watchers wondering about any collective production cut being extended, after most reckoned such would be the case before the meeting began.

Other U.S. economic data due for release Friday includes the University of Michigan consumer sentiment survey, monthly wholesale trade and consumer credit. There are also a couple of Federal Reserve officials speaking today.

–Jim

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Thursday, December 6–Jim Wyckoff’s Morning Markets Report

OVERNIGHT DEVELOPMENTS

Risk aversion is back in full force in the world marketplace Thursday. World stock markets were lower overnight, with U.S. stock indexes set to open sharply lower on strong follow-through selling from big losses Tuesday. U.S. stock and financial markets were closed Wednesday for a national day of mourning the death of former President George H.W. Bush.

There are several bearish factors at work spooking world stock markets. Chinese tech giant Huawei’s chief financial officer was arrested in Canada, on behalf of the U.S., and will be extradited to the U.S. Her company may be shipping high tech products to Iran, which would violate U.S. sanctions against Iran. This sparked fears the U.S.-China trade tensions could rise further, despite last weekend’s trade truce between the world’s two largest economies. Chinese government officials said Thursday they are still planning to work with U.S. trade officials over the next 90 days to come to agreement.

A big drop in crude oil prices Thursday is also weighing on trader and investor sentiment. Nymex crude oil prices are sharply lower and trading just above $51.00 a barrel. The OPEC oil cartel is meeting in Vienna, Austria on Thursday. Reports said OPEC heavyweight Saudi Arabia has not yet agreed to a production cut, but that it may before the meeting ends on Friday. This has many crude oil market watchers wondering about any collective production cut being extended, after most reckoned such would be the case before the meeting began.

Trader are also anxiously awaiting another speech from Federal Reserve Chairman Jerome Powell today, wondering if he will elaborate on U.S. monetary policy direction.

Another feature in the marketplace recently that also has the stock market wobbly is falling U.S. Treasury yields (rising prices). The five-year T-Note yield this week dropped below the lower maturities. A fully inverted yield curve has been historically bearish for the U.S. economy and stock market. Right now the 10-year Treasury note yield remains above the 2-year, so the yield curve is not fully inverted.

The other key outside markets today find the U.S. dollar index modestly higher.

And it’s a very busy day of U.S. economic data due for release Thursday, which includes the weekly jobless claims report, the Challenger job-cuts report, the ADP national employment report, the U.S. international trade report, the U.S. and global services PMIs, manufacturers’ shipments and inventories, the ISM non-manufacturing report on business, monthly chain store sales, and the weekly DOE liquid energy stocks report. Several Fed officials also speak today, including Chairman Powell.

–Jim

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The U.S. stock index futures sold off sharply Tuesday, to put the bears back in near-term technical control. See on the daily bar chart the strong support and resistance lines for the e-mini S&P March futures. The direction in which prices move out of the trading range bound by those lines on the chart will be the direction of the next near-term trend in prices. Right now, technical odds favor a breach of chart support at the October low of 2,603.00. Stay tuned!